Vol. 1 No. 2(Nov-Dec) (2020): Indian Public Policy Review

Issue: Nov-Dec 2020

This article focuses on the different channels through which fiscal dominance of the central bank affects financial stability in India, notably through its effect on bank recapitalization and regulation, default closure norms, monetary policy decisions, bond market regulations, capital flow measures and central bank balance sheet. Fiscal dominance also has other side effects on the economy, such as crowding out of private sector investment, external sector fragility of corporate sector financing, financial fragility of firms reliant on market financing, and finally, poor transmission of monetary policy. The paper ends with recommendations on the steps a central bank can take to limit being fiscally dominated. This requires a firm commitment to long-term financial stability, which must be reflected in the central bank’s objectives. The central bank must have autonomy over regulatory decisions, including for government-owned entities in the banking and financial sector.  The central bank should adopt a mostly rules-based policy making approach rather than relying on excessive discretion. Finally, the central bank should be democratically accountable through transparency of actions and intent as well as an acknowledgement of limitations of its policy options.

Issue: Nov-Dec 2020

Covid-19 has caught India, like the rest of the world, unawares.  Given its geographical area, population and level of development, India has handled the pandemic remarkably well.  Nevertheless, the pandemic provides an opportunity to identify measures to improve the state of preparedness for future crises.  This paper underlines Constitutional and governance issues to prepare the country for such emergencies in the future. To ensure more accurate data on mortality rates and their attribution to the pandemic, the paper underlines the need to improve the Civil Registration System. Another issue relates to the confusion arising from the faulty detection of cases when Rapid Antigen Tests (RAT) and RT-PCR tests do not provide consistent results.  This has required the ICMR to issue a press release to reconfirm in the case of negative reports in symptomatic patients when RAT is used. The paper also emphasises the need to link fiscal transfers under the National Health Mission to performances in terms of specified deliverables by the States.  Another issue is the need to amend the Constitution to place ‘Public Health’ in the Concurrent List to enable more significant role for the Union government in fighting pandemics like COVID-19.   The paper also argues for the creation of a separate local body list in the Seventh Schedule and ensure legal consistency in the assignment across different levels of government in the country.  Given the important role of the Union government, ‘Management of Disasters and Emergencies, natural or manmade’ should be an item included in the Concurrent List of the Seventh Schedule as recommended by the Second Administrative Reforms Commission.  This enables congruency and cohesion in dealing with disasters between different levels of government. 

Issue: Nov-Dec 2020

Education is a major determinant of human resource development which enables people to get better insights into the complex world they inhabit, enabling them to harness and experience their potential capabilities. This paper scrutinises the performance of the entire gamut of the education sector of India. To weigh this performance with some yardstick, the study makes a comparison of India’s performance with that of other BRICS countries. The study focuses on governance structure, quality of educational standards, and inequality issues, and addresses the issues relating to increasing prominence of privatization at all levels of education and its consequences on efficiency and equity in educational facilities. Overall, the study stresses the importance of “more and better education” including high levels of technical knowledge and skill formation. It highlights the possible impact of the COVID-19 pandemic on the education sector in India. Finally, it identifies the emerging challenges in higher education and suggests reforms for achieving efficiency with equity which is the sine qua non for building a better and advanced society.

Issue: Nov-Dec 2020

Deploying COVID-19 vaccines once they are available is going to be an unprecedented administrative and logistical challenge. This paper proposes a plan to vaccinate 80% of India’s population by December 2021. We envision this process to be divided into four main stages viz., estimating the need, securing vaccine supply, distributing the vaccines, and post-market surveillance.  Broadly, we suggest that essential workers be prioritised for vaccination in the first phase followed by everyone else. We recommend that the government issue a model contract to build manufacturer trust and incentivise ramping up manufacturing capacity. Vaccines can be priced as per market rates with the government subsidising the cost to necessary recipients to ensure equitable access. Along with public private partnerships and open markets, the government must leverage administrative capacities of Election Commission of India to roll out a nationwide vaccination drive for maximising vaccine coverage. Finally, we recommend post-market vaccine surveillance strategies to obtain data on adverse events and tweak vaccine deployments, when necessary.

Issue: Nov-Dec 2020

The article reviews the book India Unlimited: Reclaiming the Lost Glory by Arvind Panagariya. The main thrust of the book is in identifying reform areas.  In fact, 8 out of 13 chapters of the book are devoted to discussing various reforms needed to transform the economy from traditional, rural economy to modern urban economy with expanded industry and services sectors providing quality employment to absorb the labour from low productive agricultural sector.  The reforms identified in the book are extremely important and must be pursued with vigour to take the country to a higher growth trajectory and the time is opportune to initiate them. The policy makers in the country will do well to heed the reform recommendations.